Volume 1 - Iraq Watch

Annex DIraq Economic Data (1989-2003)Under the rule of Saddam, economic data wereconsidered state secrets; thus, reliable data for the erawas limited. According to the Economist IntelligenceUnit data (see Figure 6), Iraq’s GDP stood at roughly$38 billion in 1989, measured in constant 2003 dollars.From 1990 until Saddam accepted the terms andconditions of UN Resolution 986 in 1996 the GDPin Iraq remained at less than 30 percent of the 1989value. In the 1996 to 2002 period, the data shows agradual recovery as GDP increased from $10.6 billionin 1996 to $33 billion in 2000 before dropping backto $29 billion in 2001.Per capita GDP during the period followed thedownward trend seen in overall GDP. GDP per capitawent from approximately $2304 in 1989 to $938 in1990. From 1991 until 1996 per capita GDP neverrose above $507. During this period income inequalitywas a problem as the wealth was concentrated inthe hands of Regime loyalists and traders while mostIraqis subsisted on much less income.In comparison to the estimates in Figure 6, the CBIpublished a statistical bulletin with GDP data in currentprices (Figure 7). The data used in figure 7 wereacquired in 2004 at the CBI. It should be noted thatthe validity or reliability of the data is unknown.Because of the lack of specific economic data, it isdifficult to disaggregate the Iraq GDP into sectors.It is estimated that in 1989 (Figure 8) oil comprisedapproximately 61 percent of the economy. However,following the invasion of Kuwait and sanctions on theoil exports, this steadily declined until 1996 when theUN OFF program allowed Iraq to resume controlledexport of oil using UN approved contracts. The Agriculturalsector of the GDP, although larger than someneighboring states, was quite small when compared tooil and services. Iraq’s fertile agricultural land coversabout one-fifth of its territory and has allowed Iraq tosustain a noteworthy agricultural system that is basedmostly on barley and dates.Sources of RevenueIraq’s oil development began in 1901. The IraqNational Oil Company (INOC) was formed in 1964,and with Iraqi oil nationalization between 1972 and1975, INOC took over from the international oil companiespreviously running the country’s oil industry.In 1987, INOC was dissolved and merged with theMoO. Before the Gulf War, oil accounted for morethan 60 percent of the country’s GDP and 95 percentof foreign currency earnings. Following Iraq’sinvasion of Kuwait in 1990 and the embargo onIraqi oil exports, Iraqi oil production fell to 10 percentof its prewar level from 3.5 million barrels perday in July 1990 (Figure 9) to around 350,000 barrelsper day in July 1991. UN-approved oil exportsbegan in December 1996 after Iraq finally acceptedUNSCR 986 (passed in April 1995). However, Iraq’soil sector continued to suffer from years of poor oilreservoir management; corrosion problems at variousoil facilities; deterioration of water injection facilities;lack of spare parts, materials, equipment, and damageto oil storage and pumping facilities.Unlike most Gulf States, Iraq has considerableagricultural potential. About 12 percent of its landis arable, of which 4 percent is irrigated. Another9 percent is suitable for grazing and 3 percent isforested. However, during Saddam’s reign, Iraq didnot effectively use its agricultural potential. Underthe Ba’ath party, activity in the food and agriculturesectors of the economy continued to decline. Governmentexpenditures on agriculture dropped from 18percent of total government expenditures in 1976 toless than 10 percent in 1980 and continued to declineduring the Iran-Iraq war. Under Saddam, as a resultof drought, lack of inputs, poor methods and weakadministration, Iraq was unable to achieve agriculturalproduction levels near its potential. Following the firstGulf war, the irrigation systems fell into disrepair andmuch of the irrigated cropland in central and southernIraq was badly damaged by salinization. Rapid populationgrowth during the past three decades, coupledwith limited arable land and an overall stagnation inagricultural production has steadily increased Iraq’sdependence on imports to meet domestic food needs.By 2002, under the UN OFF program, between 80percent and 100 percent of Iraq’s food staples wereimported. However, Iraq remained self-sufficient infruits and vegetables.Regime Financeand Procurement207